- Malaysian Palm Oil Board (MPOB) has released the country’s palm oil statistics for February 2015. Although palm oil inventory in Malaysia continued to decline for the third consecutive month, the main takeaway from the set of statistics is the weak exports.

- Malaysia’s palm oil exports were extremely poor, dropping below one million tonnes in February 2015. This was the lowest level since June 2007 when palm oil exports were at 0.95mil tonnes.

- Palm oil inventory in Malaysia shrank by 1.5% from 1.77mil tonnes in January to 1.74mil tonnes in February 2015. This was above consensus estimate of 1.67mil tonnes. Domestic disappearance of palm oil eased by 17.7% from 215,080 tonnes in January to 177,030 tonnes in February. Malaysia is exploring the implementation of B10, which would absorb about 1.2m tonnes of palm oil from the system. The Government is also mulling over the implementation of B10 in the power industry.

- Average CPO price was at RM2,265/tonne in February, relatively flat compared with RM2,294/tonne in the previous month. Average CPO price in the two months of the year was at RM2,279/tonne. CPO prices rose above RM2,300/ tonne in late-February before softening last week as soybean prices dropped. Soybean prices fell as strikes by the truckers in Brazil eased.

- CPO output contracted by 3.4% MoM to 1.12mil tonnes in February 2015. In the two months of the year, CPO production slid by 18.0% YoY. Surprisingly, CPO production in Peninsular Malaysia recovered in February after a poor January. This is in contrast to the MoM fall in CPO output in Sabah and Sarawak in February.

- CPO production in Peninsular Malaysia rose by 9.9% from 551,155 tonnes in January to 605,632 tonnes in February while Sabah chalked up an 18.8% decline. CPO production in Sarawak declined by 8.7% MoM to 190,166 tonnes in February.

- Inventory of palm oil in crude form climbed by 7.9% MoM to 950,283 tonnes in February 2015 while inventory of processed palm oil slid by 10.8%. Stockpiles of processed palm oil in Peninsular Malaysia fell by 10.3% from 545,351 tonnes in January to 489,401 tonnes in February, while Sabah recorded a 22.6% MoM decline. In contrast to the drop in Sabah and Peninsular Malaysia, inventory of processed palm oil in Sarawak expanded by 28.8% from 72,944 tonnes in January to 93,970 tonnes in February.

- Palm oil exports fell by 18.4% MoM to 971,640 tonnes in February 2015. In the two months of the year, palm oil exports shrank by 20.4% YoY to 2.16mil tonnes. Exports of palm oil to China plunged by 70.1% from 216,253 tonnes in January to 64,765 tonnes in February while Pakistan’s palm oil imports eased by 40.0%.

- China continues to buy more soybeans and less palm oil. In January 2015, the country’s soybean imports expanded by 16.2% YoY while palm oil imports deteriorated by 17.1%. Malaysia’s exports of palm oil to European Union fell by 20.1% MoM to 136,510 tonnes in February while the US purchased 20.7% less palm oil.

- Biodiesel exports improved from 12,667 tonnes in January to 25,636 tonnes in February 2015. In the two months of the year, biodiesel exports strengthened by 430.8% YoY to 38,303 tonnes.

Source: AmeSecurities